March 26 (Bloomberg) -- Japanese shares fell on concern a
bailout plan for Cyprus will set a precedent for losses on bank
deposits in other European nations. Exporters pared declines
after the yen weakened as the Bank of Japan governor outlined
monetary easing steps.

The Nikkei 225 slid 0.6 percent to 12,471.62 at the close
in Tokyo, with volume 20 percent below the 30-day average. The
broader Topix Index declined 0.3 percent to 1,044.42, with about
as many stocks falling as rising.

Risk aversion “is spreading because of the Cyprus
problem,” said Naoki Fujiwara, chief fund manager at Shinkin
Asset Management Co., which oversees about 498 billion yen ($5.3
billion). “Investors are closely watching to see what kind of
monetary easing details come out from the BOJ, and they’re
expecting further measures.”

The Topix rallied 45 percent from Nov. 14, when elections
were announced that brought Prime Minister Shinzo Abe to power
on a platform of increased stimulus and central bank easing. The
gauge is trading at 1.2 times book value, compared with 2.2
times net assets for the Standard & Poor’s 500 Index and 1.5 for
the Stoxx Europe 600 Index, according to data compiled by
Bloomberg.

Easing Expectations

The yen weakened after Bank of Japan Governor Haruhiko
Kuroda told parliament today that he will consider buying more
government bonds with longer maturities and vowed to consider
scrapping a self-imposed rule limiting the scale of asset
buying. Yields on 10-year government bonds fell to the lowest
since June 2003. The Bank of Japan has its next policy meeting
April 3-4.

The yen was little changed against the dollar after rising
as much as 0.3 percent. Japan’s currency was 0.2 percent weaker
against the euro, trading at 121.27.

Cyprus Aid

Cyprus agreed yesterday to the outline of an aid package
that imposes losses that two European Union officials said would
be as much as 40 percent on uninsured depositors at Bank of
Cyprus Plc. Dutch Finance Minister Jeroen Dijsselbloem, who
leads the group of 17 euro finance ministers, said the bailout
should be viewed as a template for solving banking problems in
the region, Reuters reported.

Softbank rose 2.5 percent to 3,975 yen, its highest level
since 2006. The carrier will spend as much as 25 billion yen to
raise its stake in Gungho, which has surged 380 percent this
year on the rising popularity of its “Puzzle & Dragons” game.

NEC rose 4.1 percent to 253 yen, the biggest gain on the
Nikkei. The company plans to sell its majority stake in NEC
Mobiling for 70 billion to 80 billion yen, Reuters reported. The
unit’s shares jumped 15 percent to 5,510 yen.

The Nikkei Stock Average Volatility Index gained 2.6
percent to 26.33 today, indicating traders expect a swing of
about 7.5 percent on the benchmark gauge over the next 30 days.